April 28, 2021
* currencies see some slippage overnight
* Gold & Silver begin the day down…
Good Day… And a Wonderful Wednesday to you! Another beautiful day here, that will begin to be disrupted this morning, and rain and cooler temps will arrive, and stay until tomorrow afternoon… YUCK! April weather remains a crapshoot in my opinion… I ran across a cartoon yesterday that I read every day… Pearls before Swine… And in it Rat is writing, and Goat asks him how long the rewrite will take, to which Rat replies, “my writing is perfect the first time, revisions are for sad little losers”… And that reminded me of my later years of writing at my old bank, and every day the Pfennig had to be reviewed by lawyers. You wouldn’t believe the things they wouldn’t let me say! And I’m with Rat on this one… I’m just saying… The Amazing Rhythm Aces greet me this morning with their song: Third Rate Romance… Interesting lyrics to that song, for sure!
Well, it was bound to happen some time… And yesterday, was some time… A day when the currencies didn’t see many bids, and they were offered but not by much… The Dollar Index rose from 90.81 in the morning to 90.90 at the end of the day… Still not much movement, and the euro remained well within spitting distance of 1.21, at the end of the day… Traders are still hiding under shells waiting for the FOMC to end this afternoon, and they get the latest set of lies, I mean of ideas from Cartel Chairman Jay Powell… To me Powell’s press conference will be full of incorrect statements that border on lies to the American public… But, even though we didn’t have a say in who took over the chair of the Cartel, we have to deal with what his policies are….
Gold never found a bid yesterday either but… again the moves were small… Gold lost $5.20 on the day to close at $1,776.80. Silver found a way to gain a few shekels on the day, and closed at $26.35, up 7-cents on the day… So, from what you can see with the Dollar Index move, and the Metals move, you will come to agree with me, that traders have gone on hiatus this week, so far, ahead of the FOMC meeting, which takes place this afternoon…
In the overnight markets… it appears the traders there woke up, and decided to buy dollars ahead of the FOMC… The euro saw some slippage, and the Dollar Index rose to 91.05, from yesterday’s close of 90.91… Gold ^ Silver continue to see nothing but sell orders, with Silver really seeing some selling this morning in the early trading… Gold is down $9.80 and Silver is down $43-cents to start the day.
The U.S. President has announced a new $1.8 Trillion spending plan called the Family Plan, that he will explain will be a net zero plan because he plans to tax the rich… More spending, more taxes… I’m at a loss as to how much more of this is going to be introduces to us, and shoved down our throats… I’m just saying…
I can’t help but think that with all the talk of an infrastructure Bill, and a new Green Deal, and more stimmy checks, and a Family Plan, that Traders will be ready and willing to begin to sell dollars once they have heard Jay Powell speak and not say anything about tapering… Everything else he has to say will be taken with a grain of salt, which is more than I would give him credit for! I read this morning that the markets are expecting Jay Powell to announce that the Cartel will begin tapering in the 4th QTR… The question I would have is what happens if things change before now and the 4th QTR? It’s not as if we don’t have any experience with things changing overnight!
So, if the markets are expecting this announcement from the Cartel, that explains why bonds got sold off the back of a truck! The yield on the 10-year Treasury rose from 1.58% to 1.64%. Remember in bonds, when yields rise, the price of the bond goes down, and vice-versa…
Someone with a bigger mass of gray matter in their heads needs to solve this riddle for me… Riddle me this Batman… The Cartel has implemented Yield Curve Control (YCC) to bring down the yields of Treasuries, so how’s that going to work (YCC), that is, when you begin to taper? (begin to sell the Trillions of bonds they own) Ahhh, grasshopper, I would betcha a shiny quarter that the Fed Heads haven’t thought of that yet…
Yesterday, I tried to spell out the proposed tax increases out for you, but in case you didn’t get it… There was an article on www.zerohedge.com with some Q.&A’s… Let’s listen in:
Q: Put a 60% tax on capital investments and what happens to investment?
A: Investment in new businesses will plunge.
Q: Put huge taxes at the state level and what do people do?
A: They move.
Q: What happens to neighborhoods, even states, when the wealthy flee?
A: Think Illinois
Chuck again… And I would add to the states, New Jersey, New York, and California…
OK… but you can’t say I haven’t warned you that this day would be coming for a long time now, right? I’ve said over and over again that this dance is gonna be a drag, no wait! I’ve said over and over again that this uncontrolled debt buildup is going to bring about higher taxes… And these tax increases by the Biden administration will be the first ones in 30 years!
Remember George Bush, in 1988 saying, “read my lips, no new taxes”, and then in 1991 taxes were raised? Just a little history there for us this morning… Because there’s your last time 30 years ago that taxes were raised… There are a good number of people in the working world that have never heard of higher taxes… Well, that’s all about to change!
Well, let’s talk about something else besides taxes… And inflation, and debt, Oh no! I can’t think of a single thing to say! Ok, how many of you thought I was serious that I can’t think of something to say? Longtime readers know all too well that, that’s not true!
So, did you hear that Russia & China’s plan to dedollarize is working? Well, I have an article for you in the FWIW section today that talks about this dedollarization, and so forth, so you won’t want to pass that up and go to the Big Finish without stopping by the FWIW article first!!
In the U.S. Data Cupboard today… The FOMC meeting comes to an end, and Jay Powell will hold a press conference afterward. That’s the Big Kahuna news item today… An FOMC Meeting… What has our lives become of when we’re looking forward to a FOMC Meeting? I take that back, if things were different, this could have been an interesting meeting, and press conference, but since things haven’t really changed for over a year now, what else can you expect?
In yesterday’s Data Cupboard we had the Case/ Shiller Home price Index, and it showed exactly what I said it would show, that there was a huge price increase in housing this last year… 12% was the year to date figure for February… Just wait until the next couple of months pass bay and the price increases in building materials drive home prices sky high!
We also saw the stupid Consumer Confidence Index for this month of April, and it shot higher by a huge margin from 109.00 to 212.7! Like I said, the unemployment bennies are great, the stimmy checks are great, the stock market is setting new highs all the time, life doesn’t get any better than this, for most people… But like I’ve said over and over again… They don’t ask me, my opinion, on what could go wrong… Or better yet, maybe they read the Pfennig, and know better than to ask me? As if!
To recap … The currencies gave a some ground on Tuesday, but not that much, and Gold never found a bid and lost $5.20, but all in all the markets were quiet, and no big movers were on display, as traders continue to be on hiatus until they see the color of the FOMC’s meeting outcome… The overnight markets didn’t bring about any major changes in trading, but we did see some slippage in the currencies, and that has Chuck scratching his bald head… so we all have to wait for the outcome of the FOMC meeting today, and the press conference following. Chuck goes a step further in talking about the new taxes that are coming your way… And there is more, as always!
For What It’s Worth… Ok, I gave you a teaser above on today’s FWIW article about how Russia’s plans to dedollarize are working, and getting people to notice, that life without having the dollar in the terms of trade and hogging all the shelf space of your currency reserves, is working… For Russia that is, and the article can be found here: Putin’s Bid to Ditch Dollar Picks Up as Exports Move to Euro (msn.com)
Or, here’s your snippet:” Vladimir Putin’s multi-year push to reduce Russia’s exposure to the dollar hit a major milestone as the share of exports sold in the U.S. currency fell below 50% for the first time.
Most of the slump in dollar use came from Russia’s trade with China, more than three-quarters of which is now conducted in euros, according to central bank data published late Monday. The common currency’s share in total exports jumped more than 10 percentage points to 36%, the data for the fourth quarter show.
Multiple rounds of sanctions and the constant threat of more to come have pushed Russia to find ways to isolate its economy from U.S. interference. The central bank has also stripped back its holdings of Treasuries in its international reserves, loading up on gold and euros instead.
The shift away from dollar trade with China accelerated in 2019 when oil major Rosneft PJSC switched export contracts for crude shipments to euros. Lots of mid-cap companies are now also seeking ways to reduce exposure to the U.S. currency, with many switching contracts to yuan or rubles in trade with China, according to Daniel Haindl, the co-head of FX & interest-rates sales at VTB Capital in Moscow.
“We also see that a growing portion of settlements between Russia and former Soviet countries is in rubles,” Haindl said.”
Chuck again… I know this doesn’t make you want to say hip hip hurray for Russia, but it does tell you that the world will eventually come around to Russia’s way of thinking that the U.S. has not shepherded the dollar away from danger and potential collapse from so much debt, and money printing… And that Idea that many other countries could follow suit, realizing that they haven’t the need to hold so many dollars in reserve, and that idea scares the bejeebers out of me!
Market Prices 4/28/2021: American Style: A$ .7744, kiwi .7214, C$ .8063, euro 1.2069, sterling 1.3865, Swiss $1.0924, European Style: rand 14.3601, krone 8.2687, SEK 8.3795, forint 299.60, zloty 3.7993, koruna 21.5114, RUB 74.90, yen 109.00, sing 1.3264, HKD 7.7624, INR 74.43, China 6.4813, peso 20.06, BRL 5.4390, Dollar Index 91.05, Oil $63.38, 10-year 1.64%, Silver $25.93, Platinum $1,218.00, Palladium $2,956.00, Copper $4.47, and Gold… $1,767.30
That’s it for today… well I got another opportunity to go the Busch Stadium again last night with good friends Gus & Dianne… And I saw a great pitched game, and some timely hitting for once in a Blue Moon, for a Cardinals win! Then got home late last night, and I’m really dragging the line this morning… So, as soon as I hit send on this letter this morning, I’m going back to sleep! There are times I’m so very glad that I’m retired! So, if I stumbled around this morning I didn’t mean to… My good friend Gus had been to the Blues game the night before and saw a winner, and then last night to the Cardinals game and also saw a winner, I told him he might want to contact those teams management, and lease himself out to games for a price! HA! I got a Jack Buck statue (small) that has voice chip that has two of his most famous calls, last night at the game, this will fit in nicely with my Stan Musial statue I have on my back bar… The giveaways they have at the ball game these days are much better quality of things than they used to be.. .The Marshall Tucker Band takes us to the finish line today with their song: 24 Hours At A Time… I shouldn’t be listening to this song, because I won’t be able to go back to sleep afterward! I hope you have a Wonderful Wednesday, and I hope you will Be Good To Yourself!
Chuck Butler